IBEF: November 09, 2020
To benefit from lower tax rates and improve sales, Mercedes-Benz, the country's biggest luxury car producer, aims to assemble more cars in India.
The company rolled out its first AMG vehicle from its Pune factory earlier this week, making India one of the brand's group of countries to manufacture.
AMG cars are vehicles that have been entirely imported for sale in India, so far. The AMG GLC 43 Coupe became India's first AMG car to be partially manufactured. The AMGs are also produced outside of Germany in Thailand, the US and Malaysia.
In India, BMW and Audi also have assembly facility that have been operational for over a decade. From its Chennai-based factory, BMW currently produces eight models. One of the models assembled by Audi from the Auran is the A6 sedan, in Aurangabad.
Mr. Martin Schwenk, managing director and CEO, Mercedes-Benz India, said, “In the last couple of years, we saw that AMG has performed really well in the success category. We feel that there is a great likelihood of further expanding AMG 's footprint and making it acceptable to the public at the same time.”
"That's why we were thinking about localising the AMG brand, so we introduced the GLC 43 Coupe. It is a commodity that would cost about Rs. 1 crore (US$ 135.13 thousand) (if completely imported), but it comes to Rs. 76.7 lakh (US$ 103.64 thousand) after localization,” added Mr. Schwenk.
There are two plates in India for import duties on fully constructed cars — 60% and 100%, depending on the value. The import duties are 15% and 30% for partially assembled units.
Mercedes-Benz has already manufactured 10 models in India, including the C-Class, E-Class and Maybach, sourcing engines from Force Motors of Pune. Compared with 2018, the eight AMG cars imported by the carmaker recorded a growth of 54% during 2019. Mercedes did not share the AMGs' absolute figures.
“When we introduce the car in India and the AMG version of it, we are hoping to take this further with the A-Class Limousine. With that launch, we will be able to boost the portfolio size,” added Mr. Schwenk.
Amid weak demand conditions, Mercedes-Benz has ramped up investment in India over the last two years. The investments poured into the localization of more goods and the assembly plant.
We have invested Rs. 400 crore (US$ 54.05 million) in India in the last 12-18 months, mainly to begin preparing to produce the new GLE, GLS, GLC and now AMG models. The A-Class and GLA entry segments will also be manufactured in the future. So far, India has witnessed an investment of Rs. 2,600 crore (US$ 351.33 million),” added Mr. Schwenk.
Mercedes-Benz logged sales of 13,786 units in India in 2019, a fall of 11% from 15,538 units in 2018. According to the company, India's demand for luxury cars is starting to recover and that is evident from the momentum seen during the time of Navratri and Dussehra. During those 10 days, the company sold 550 vehicles.
"We're very truly happy with the growth in demand. Since July, we have seen growth coming in every month. Currently, we are in a normal year at 80-90%. So, we had a powerful ramp-up leading into the holiday season. It is better than what we were hoping for. "Diwali is going to be even better and (sales) must be similar to Diwali last year," Mr. Schwenk added.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.